A key issue for supply chain professionals is the long-term structural change that the recession will bring to the economy with all the implications that will have for supply chain strategies.
In the UK there have been big changes in the banking sector and the property market while some famous household names have disappeared from the high street. But my guess is that it is the manufacturing sector that is going to see the biggest changes. The thought is prompted by the latest Purchasing Managers’ Index produced by the Chartered Institute of Purchasing & Supply with Markit.
This shows that in July UK manufacturing started to move ahead for the first time in 16 months. The index at 50.8 was up from 47.4 in June and above the no-change mark of 50.0 for the first time since March 2008.
This reflects the results of another Markit survey which looked at manufacturing in the Euro zone and found that activity had been improving for five months.
However, the CIPS/Markit report also noted that the recession has substantially reduced the overall size of the UK manufacturing sector. In fact, said CIPS chief David Noble: “We may have to accept that the face of British manufacturing has changed forever and the sector will stabilise at a much-reduced size than before the recession.”
Clearly, anyone planning to go back and take up where they left off could be in for a nasty shock.
One of the early effects of the recession was to expose the vulnerabilities that existed within supply chains – particularly managing risk in extended chains.
The CIPS/Markit survey highlights the fact that this recession is not just a blip – the world has changed for good and future supply chains will have to recognise that.